With shares of Sony plunging 12 percent on Friday after the company slashed its earnings outlook, strategists say time is running out for the Japanese electronics maker to prove that it can engineer a turnaround of its struggling business.

"The ongoing theme here is [that] a weak yen isn't going to bail out a company that has a poor product strategy," Sean Darby, chief global equity strategist at Jefferies told CNBC.

"My worry with Sony is that investors have given it one chance, and are unlikely to give it a second chance," Darby said, adding that Jefferies downgraded its rating on the stock to "hold" from "buy" on Friday.

Sony on Thursday cut its operating profit forecast for the year through next March to 170 billion yen ($1.73 billion) - from its previous guidance of 230 billion yen - and reported a net loss of 19.3 billion yen in the three months to September.

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The company's movie business was a major contributor to the weak quarter. The unit posted an operating loss of 17.8 billion yen, reversing from a profit of 7.9 billion yen a year earlier. Its TV operations also flipped to a 9.3 billion yen operating loss from a 5.2 billion yen operating profit in April-June.

"Sony is in crisis, they need to accept that. The latest earnings report should take out enthusiasm for anyone who brought this stock on yen weakness. What the board is doing is systemically destructing value of the stock," said Ben Collett, head of Asian equities at Sunrise Brokers.

Sony is struggling to remain competitive in an environment where Apple and Samsung have grown to dominate the consumer electronics space with their vertically integrated businesses of hardware, software and services.

"It's a huge company and everyone needs to be on the same page. Since (CEO) Kazuo Hirai has come in, he's tried to get the individual units to work together. But Sony is moving way too slow to respond to the competitive challenges," said Tim Bajarin, president, Creative Strategies.

"Ultimately for Sony to emerge they are going to have to be a company that's more aggressive with innovation not only in hardware, but also software and services," he said.

However, despite the company's struggles Bajarin said he's not ready to give up on Sony. "Hirai is very forward thinking - he knows what needs to be done. He has the skill set but he has to work within a bureaucracy," he said.

When responding to a question about Sony's current business structure in the company's post-earnings conference call, Masaru Kato, chief financial officer, noted that the CEO was on top of the situation, according to a transcript posted on Seeking Alpha.

"If it is necessary, Kazou Hirai, our CEO, has always been saying that if he sees signs that the current business model or the action plans that we are taking to reduce losses will not result in achieving our objectives, he is willing to take further actions. Now are we at this point? Maybe we have to see how we do in the third quarter. But whatever we do, I mean, next year, we should be in a position to improve on what we are doing this year," Kato said.

Breaking up the business

Industry watchers say the breakup of Sony's business by splitting its movies and music division off from the rest of the company - as proposed by activist hedge fund Third Point earlier this year - remains a possibility.

In August, Sony rejected the hedge fund's call to spin off its entertainment business, saying it strongly believes that continuing to own 100 percent of the company's entertainment business is fundamental to the company's success.

"I think they have to consider what Third Point is saying as a large shareholder. One of their faults is they could adopt some of the ideas they have been given," said Yuuki Sakurai, president of Fukoku Capital Management.